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Mortgages plc announces sub-prime rate rise with Edeus to follow next week

Merrill Lynch subsidiary Mortgages plc has confirmed it will be re-pricing its sub-prime product range as Edeus admits that rates will have to go up.

Mortgages plc says its fixed rates will increase by a minimum of 0.75 per cent with some higher risk products increasing by greater than 1 per cent, with effect from 21st August.

It says it is adjusting its product pricing to reflect the recent widening of funding costs in the capital markets.

This comes as Edeus managing director Alan Cleary says it will be putting its rates up next week.

Cleary says: “The cost of funds have gone up right across the board so the cost of borrowing is going to have to go up. This won’t be just in the sub-prime market but in prime as well.”

Cleary says it will be putting rates up on an average of 35 basis points.

“This is the only way to go. Our criteria hasn’t changed and we’re not withdrawing our products. We were dealing with the risk element in the right way before.”

Money Marketing revealed last week that DB Mortgages, Infinity Mortgages and Unity Homeloans had all withdrawn their sub-prime product ranges. Both DB Mortgages and Infinity Mortgages say they will re-launch their products from next week.

Mortgages plc marketing director Ian Whittaker says: “This pricing adjustment will come as a surprise to no-one. Recent changes in the global capital markets mean that most lenders are reviewing their pricing and Mortgages plc is no exception.

“I would like to stress, however, that although Mortgages plc is adjusting its pricing, we are not withdrawing from areas of the market and remain fully committed to being a leading player in the UK non-conforming mortgage market.”

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